Sequencing is a little-known method for approaching the trade from start to finish. This Blog will build on helping you to understand what goes into a forex trading plan. We started with deconstructing the big picture, selecting the best pairs for trading and ensuring that the edge remains and now will talk about the sequence of progress for a trading plan.
Traditional Sequence of a Trading Strategy
A common approach of the new trader is to find the right entry strategy. The reasoning is that if they know when to enter the market, the entire problem will be covered. Usually, the right entry is only known in hindsight. However, there will likely be people telling you to find the entries for you.
Entry price is important. However, basing your strategy on entry price alone tends to lead to two key problems:
First, overconfidence starts to see that, and when a trader becomes overconfident, they tend to ignore the regularly-present risks.
Watch out below Video: Step By Step to Become a Better Trader
Appropriate Sequences of a Trading Strategy
The easiest way to state the appropriate sequence of a trading strategy is to entry price pales in comparison to the importance of entry size. However, it is often seen as a boring approach. Many of tout diversification as the key to market returns but the diversification is a roundabout way of ensuring that trader does not have all their eggs in one bucket.
A key reason or trade size is that it allows for the many fundamental mistakes that a new trader will make. Investing in the foreign currencies is to take on a large market with a rather steep learning curve, and you need to allow for the mistakes in the opening.
The irony of markets and their traders that the majority believes they are rational but few if any are. There have many texts pointing out on the pitfalls of the investor’s mind but either way, you slice it, traders in any market often skew market input to favor the outcome the favors their survival or out performance.
The phenomenon has led many traders to automate the trading strategy. Wall Street has had algorithmic traders because they understand computers run on programs rules absent of the predictably irrational traders. However, before you rush to code your strategy please understands the ability to turn on or off the strategy opens up the same emotional pitfalls. While many have automated the strategies to reduce the emotional interference, trade size is still the better place to begin to ensure the longevity of the system.
In case, to join and to beat the market you must first learn to survive in the market. The right way to survive the market is to ensure you are not to overexpose and anyone trade such that one outlier events take you of the markets enabling you to grow your accounts.